Commercial mortgage market liquidity and its effect on capitalization rates
This study extends a previously developed model of real estate capitalization rates. The preceding model suggests that real estate cap rates are a function of debt and equity spreads over the real risk free rate. In an effort to further the previous research, the effects that commercial real estate mortgage markets have on cap rates is considered. Mortgage originations and debt service coverage ratios are used to proxy the effects of the commercial mortgage market. The empirical results reconfirm the significance of debt and equity spreads. Furthermore, mortgage markets are shown to have a significant effect on capitalization rates. These results help to explain contributing factors to the real estate bubble of 2007.
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Bachelor of Science (B.S.)
College of Business Administration
Business Administration -- Dissertations, Academic;Dissertations, Academic -- Business Administration
Length of Campus-only Access
Honors in the Major Thesis
Destefano, Leonard G., "Commercial mortgage market liquidity and its effect on capitalization rates" (2010). HIM 1990-2015. 1075.